Monday, August 18, 2025
Market participants began a new trading week without any true catalyst to drive stocks in any particular direction today. Slightly weaker than expected homebuilding data combined with slightly better-than-expected earnings results from a handful of companies helped keep trading flat: the Dow was -14 points, -0.03%, while the S&P 500 was -1, -0.02%. The Nasdaq eked out the slightest of gains, +0.03%, while the small-cap Russell 2000 outperformed the field, +0.35%.
Homebuilders Confidence Back to Multi-Year Lows
Analysts had expected a slight tick-up in Homebuilders Confidence for August of this year, but instead this survey ticked lower: 32, versus 34 projected and 33 reported for July. This matches June’s 32, which is the lowest level we’ve seen since December 2021. Homebuilders are reportedly boosting incentives for new home sales to 5-year highs. Demand for new housing continues to be weak as mortgage rates remain at elevated levels.
Barring an emergency at the Federal Reserve, we won’t be seeing any interest rate cuts until September 17th, at the earliest. Even then, we expect a 25 basis-point (bps) cut, even as market participants got happy last week (for a short time) that a 50 bps cut was on the table. This would take us below 4% on the Fed funds rate for the first time in 2 1/2 years.
This week will bring us other housing data, including Housing Starts and Building Permits for July out tomorrow morning. Both are expected to come in slightly lower month over month, to 1.30 million on Starts ands 1.39 million on permits. Existing Home Sales will be released later this week, and this headline is expected to improve to 4.0 million from 3.93 million reported a month ago.
Earnings Results After the Close: Palo Alto Networks, Fabrinet
Enterprise cybersecurity firm Palo Alto Networks PANW outperformed estimates on both top and bottom lines for its fiscal Q4 after the closing bell today. Earnings of 95 cents per share bettered the 88 cents in the Zacks consensus, and 20 cents higher than the year-ago tally of 75 cents per share. Revenues of $2.54 billion surpassed the $2.50 billion analysts were looking for. Next-quarter earnings estimates are ramped up, and the same for full-year revenues. Shares jumped +7% on the news, now +4%.
Manufacturing services provider Fabrinet FN also posted positive surprises in its Q4 report out this afternoon, with earnings of $2.65 beating consensus by a penny on $909.7 million in revenues, ahead of the $883.1 million analysts were looking for. Guidance on the higher range for both next-quarter earnings and sales was pushed up, although after +48% gains year to date, shares are selling off -1.5% in late trading.
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